Haku Mo‘olelo

September 23, 2011

Maui County has been a leader in many phases of governance as well as in economic development, but lags its sister counties in one area of government performance: accountability. It's the only county without an independent auditor. Proposals to create a county auditory are among dozens of issues pending before the 2011 Maui County Charter Commission (www.mauicounty.gov/archives/122/Matrix%20090211.pdf).

Support for the position is an indicator of the growth that has turned Maui County into a $600 million-a-year operation. More money channeled through more county accounts creates more potential for mismanagement as well as fraud - such as when Maui County's Finance Department invested $32 million in auction rate securities that proved to be high risk when their market froze.

It's not clear an auditor can prevent errors in judgment illustrated by the auction rate securities case. The state had $1 billion tied up in frozen securities funds before the state auditor's office reviewed finance operations to find that the investments violated state policies.

But an auditor could prevent future waste and losses by discerning inefficiencies and duplication in government operations.

An issue is cost versus benefit, ironically the kind of weighing of factors on which an auditor could advise. An advocate for a county auditor, an Audit Subcommittee for the 2008-09 Cost of Government Commission, estimated the office could save $5 million. Subcommittee Chairman Malcolm Findley estimates the cost at $350,000.

The savings estimate is based on a business management concept that efficiencies can save 1 percent of a business budget. The subcommittee also notes that savings requires "follow-up on all completed audits to sure that recommendations requiring corrective action are properly closed out."

Costs of a Maui County auditor would depend on what the office would be expected to do beyond financial and performance analysis of county agencies. Annual financial audits already are required. Maui County has an auditor's position in the Department of Finance while the County Council has authority to retain staff able to conduct performance audits - albeit with restricted authority to demand information from the administration.

Follow-up is an issue. Neither the state auditor nor other county auditors have the authority to mandate departments and legislators comply with the auditor's recommendations. Typically, with state auditor findings departments make corrections where they agree with the auditor's findings and take no action when they disagree.

Findley's estimated cost of a county auditor seems low, considering the level of professional talent that would be required as well as funding needed to contract for specialized services. State Auditor Marion Higa operates with a staff of 14 and still contracts for special services. But Higa deals with a much larger state bureaucracy, and her responsibilities include analysis of bills pending before the Legislature and evaluations of professional licensing requirements.

But Maui County now has even less. The County Charter designates the advisory Cost of Government Commission to conduct performance reviews of county operations and to submit recommendations to the mayor and council. It is authorized "to secure directly from any department, commission, board, office, or any other instrumentalities of all branches of the county government or from any individual officer or employee of the county, information, suggestions, estimates, and statistics necessary to carry out its duties" - powers that also would be delegated to a county auditor.

A charter provision for an auditor would convert a voluntary, advisory board into a standing county department independent of the administration and council, although proposals to the Charter Commission retain the Cost of Government panel alongside an auditor, effectively duplicating efforts. Past members of the Cost of Government Commission have expressed frustration over a lack of action on their recommendations.

A county auditor may be more effective.

* Edwin Tanji is a former city editor of The Maui News. He can be reached at hakumoolelo@earthlink.net. "Haku Mo'olelo," "writing stories," is about stories that are being written or have been written. It appears every Friday.